When people tip in cash I get to take it under the table but when people tip on CC or check it shows up on my paycheck and is taxed. Is this legal in California? It doesn’t seem right.
No, you are wrong, when they tip you in cash you must still report it. When you receive tips you are required to pay your US income taxes on the money, it is up to you to keep some back to pay the tax at the end of the year. In California you will also have to pay your state income tax. Not paying income tax will be prosecuted more quickly than a lot of other crimes.
It may not seem right to you, but to those of us who do not get tips and have to pay taxes on our entire income it seems only more than fair.